Hearings set to begin on NV Energy rate case

Up for a little light reading this weekend?

Then head over to the website of the Public Utilities Commission of Nevada, where you can peruse 171 documents and 7,700 pages of evidence in NV Energy's general rate case.

The commission is set to begin hearings into the case on Tuesday. The trial will continue into November, with testimony on NV Energy's return on equity, revenue and request for higher rates.

The commission has scheduled consumer sessions at 1 p.m. and 6 p.m. Oct. 11 at Cashman Center to get feedback .

Before you throw in your 2 cents' worth, here's what you need to know.

Your monthly power bill is split into two parts: general rates and fuel rates.

State law requires NV Energy to file general rate cases every three years. General rates cover operating costs such as maintenance, labor, depreciation of assets, taxes, interest on debt and return on equity.

The other part of your bill is the cost of fuel, mostly natural gas, that runs NV Energy's power plants, as well as purchased power to cover extra electricity needs during peak periods. Fuel costs pass directly to ratepayers, with no profit or loss for NV Energy. The utility files to adjust those rates every quarter and once a year.

Though the rates adjust separately, they're linked in NV Energy's general-rate filing.

Here's what the utility has asked for.

First, NV Energy says it needs $249 million more in annual revenue, on a current annual sales base of $2.2 billion. About half of that operating increase would pay for the 484-megawatt expansion of NV Energy's Harry Allen power plant north of Las Vegas, which came on line in May.

Some of the increase would also pay for higher investor returns. The commission now allows a maximum return of 10.5 percent, but the utility has asked for a ceiling of 11.25 percent. The company earns smaller returns than granted; right now, returns run at about 7 percent.

As for those higher rates, well, it's complicated.

NV Energy asked for an 11.5 percent general rate increase to cover that revenue gain. But thanks to falling natural-gas prices, the fuel-cost half of your bill will drop more than 4 percent today. That rate decrease will return $182 million to customers, mostly canceling out the $249 million revenue hike NV Energy seeks on the operational-expenses half of your bill. NV Energy said it will defer the remainder for a later rate case. Between the fuel-cost refund and the deferral, there'd be no impact on average bills, which would stay at around $146 a month.

NV Energy asked the commission to delay today's fuel refund until Jan. 1, when the new general rates kick in, so that consumers' bills wouldn't change. But the commission ruled on Sept. 20 that it couldn't find a compelling reason to hold off on the refund.

That means -- stay with us, here -- the average bill will drop from $146 to $140 today, but would rise back up to about $146 on Jan. 1, if the commission approves NV Energy's rate case.

The Bureau of Consumer Protection is working to prevent that approval.

State consumer advocate Eric Witkoski, who represents residential ratepayers, said in a Thursday statement that NV Energy could get by with $88 million in new revenue, rather than $249 million.

Witkoski got to $88 million partly by cutting NV Energy's rate of return from 11.25 percent to 9.7 percent, saving $60 million. Reducing the company's operations and maintenance payroll by 4.4 percent would save $4.4 million. Lengthening the cost-recovery period for Harry Allen would slash $32 million, while refunding plant-depreciation overpayments and tax savings to ratepayers would cut $42 million. He also recommended pushing recovery for the utility's new computer system into the 2014 rate case, saving another $10 million now.

To see evidence in the case, visit the commission's website at puc.nv.gov. Go to "Docket Info" on the left, click on it and select "Electric Dockets." The rate case is Docket No. 11-06006. The commission has consolidated Docket No. 11-06007, which involves depreciation expenses associated with utility plant assets, and Docket No. 11-6008, which deals with planning costs for the company's canceled Ely Energy Center, into hearings for the general rate case.